Root Causes of US Healthcare Design Conflicts

Single payer means single customer. If there is just one customer (no others exist) who no longer needs your services, or has an alternative to your services, then that customer, the single payer, can set the price just above the point where the provider is willing to quit that business.

With competing providers, the single payer will pick your services over other competing providers based on value versus price. Quality, availability, and other negotiable attributes are components of value. The single payer may want different mixes of value attributes for different reasons – and use multiple providers.

There is a lot of talk about single-payer healthcare. This would mean that providers of healthcare could have only one customer, implying the US government. Just as the term ‘Obamacare’ was used in lieu of Affordable Care Act, single-payer is misleading. Possible better terms would be ‘tax funded base healthcare’, ‘social safety healthcare’, ‘non-profit government sold healthcare’, ‘employer independent healthcare’, ’employer independent tax funded health care’, universal healthcare, or some other form depending on whether the healthcare is funded by taxes or purchased through the government with private money, who is actually covered, and whether other sources of healthcare are possible.

There can be a mix of tax-funded healthcare and non-profit-government-sold healthcare along with private health insurance and direct payment to healthcare providers as happens now. Which one has more value to an individual depends on that individual’s trade-offs of the parameters of value.

Price is always a component of value. Price risk (maximum amount potentially paid – deductible, or other portion of amount) can be a component of value. Hidden costs do not add to value, they subtract from value. Transparency of ALL potential prices is needed for rational decision making.

Just as overhead in a corporation can double the cost of a product, overhead can double the cost of healthcare. Health insurance companies (and equivalent players) can have large expensive bureaucracies whose goal is to deny payments to healthcare providers (thereby increasing the indirect costs of business for healthcare providers and themselves). The insurance companies will have shareholders who demand a competitive rate of return on their investments. The compensation of the decision makers of the health insurance companies (CEO) is dependent on the rate of return for those shareholders. The wasted cost of these massive time and effort  battles cause a large inefficiency in financial resources that would otherwise go directly to patient care.

The debate seems to be whether inefficiencies by the government would be greater than inefficiencies previously mentioned in the private sector. Other countries seem to prove that the government is more efficient. However, each government is different. It could be that the US government is much more inefficient than any other government and should not be involved in healthcare.

There’s also the question of accountability. A government whose bureaucracy is poorly held accountable for lack of skills and knowledge, incompetent, willing to be bought, or just malicious (sociopaths or psychopaths), will be inefficient in distribution of healthcare services and interfere with improvements in the system.

The US seems to protect its bureaucratic public servants. The recent problems with police all over the country, and the incarceration of four times as many people in the US as China (which has a larger population) or any other country is one example. The reputation of the IRS for complexity and hostility compared to other countries such as the Inland Revenue Department in New Zealand (or multiple others) is another example. The US has an enormous number of lawyers and accountants to deal with the government compared to other countries.

Are these the causes of fear of a universal healthcare system in the US? Is it a cultural problem that needs to be attacked at the cultural level?  What would help? Better education, better standard of living, better (fairer) judicial system, attacking corruption?

Are we asking the right ‘root’ questions?

About Brian D Gregory

Board Certified Anesthesiologist for 20 years. MBA from U of Georgia '90: Finance, Data Management, Risk Management. Practiced in multiple US states and Saudi Arabia at KFSH&RC. Taught residents in two locations. Worked with CRNAs for 20 years.
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